This summer saw the launch of a myriad of payment solutions in the African continent. African countries are leading a quiet revolution in payment methods which has been changing the way people use money dramatically. A lot of this innovation comes from the explosion of mobile use in the continent, and the lack of infrastructure for traditional financial services in most countries.
The continent presents extreme potential and is seeing incredible growth in the number of mobile phone subscribers. On its first report on the African region, the GSMA Mobile Observatory observed that the continent was the fastest growing mobile market, with over 620 million mobile subscriptions in 2011.
With more people owning mobile phones than bank account in most African countries, it was a logical transition to mobile banking services.
One of the leading countries in terms of payments innovation is Kenya. In 2007 m-Pesa was launched, in partnership with Safaricom and Vodafone. M-Pesa works like a bank on your phone, and lets its users send money to others, pay for your bills, or even for a taxi ride – services that do not exist, or were only very recently launched in most European countries. The most innovative feature of m-Pesa is P2P money transfer. In a continent where banking infrastructure is poor, and much of the population lives in isolated areas, solutions like m-Pesa allow people to send money to each other simply by sending an SMS. You can even withdraw money from an ATM simply by using your m-Pesa code. Now m-Pesa has expanded to other African countries, and has become a mainstay in terms of payment solutions in the continent.
But M-Pesa is not alone. In Nigeria, Etisalat launched a mobile commerce application which gives its users the possibility of using the application as a mobile wallet, regardless of their bank or mobile device. Users can manage their bank accounts as well as perform the range of services offered by m-Pesa, Similarly the Central Bank of Nigeria, Zenith Bank and Visafone have recently partnered to launch EazyMoney – a mobile payment system that, allows users to send and receive payments through their phone. Actually, there are 8 other mobile money services in the continent.
The launch of EazyMoney, sponsored by the country’s central bank, is to accompany the plans for Nigeria’s “cashless society” project. The NCB is enforcing serious measures to reduce the use of bank notes and coins in the Nigerian capital – to reduce both the high costs of handling cash and the corruption and informal economy activities it is associated with. In South Africa, the move towards cashless payments is taking place too. Standard Bank’s innovation hub has been supplying cashless payment methods at festivals and public transport.
The continent seems ready to welcome alternative payments, different from those proliferating in Europe and the US.